'Dirty tricks' in the CRM market - part two

NEWS Siebel defended its retention record and countered that it replaced a PeopleSoft CRM project at Gateway last year. "The reality is we have 3,500 customers. We had 400 new orders for software and added 200 new customers in the second quarter alone," said Siebel's David Schmaier. He also said there was absolutely no data that indicated a customer-defection problem. It may be early to claim Siebel is losing customers. After all, Siebel products aren't exactly disposable; they typically costs millions of dollars to license and install, and can take more than a year to get up and running. Yet customer-defection claims and the Nucleus report hit a nerve with Siebel, which boasts a customer satisfaction rating of up to 98 per cent. The company issued a press release on Thursday, claiming "the highest levels of customer satisfaction in the information technology industry." "We're starting to see some cracks in the armour of a company with much vaunted and highly suspicious customer satisfaction rating," said Greenbaum. "They have only themselves to blame if they start getting shot out of the water on this issue. They set the expectation that they have a 98 per cent approval rating." Siebel's customer satisfaction statistics come from an outside auditing firm called Satmetrix, which was hired to survey customers on a quarterly basis. Siebel holds an equity stake in the firm. Nucleus surveyed just a fraction of Siebel's more than 3,500 customers, but all those it contacted were featured as success stories on Siebel's website, said Rebecca Wettemann, vice president of research at Nucleus. "If their success stories are having a difficult experience, what does that tell you about the broader population of Siebel customers?" she asked. Though much of the research Nucleus conducts is commissioned by companies in high-tech and other major industries, the company said no one underwrote the Siebel study, which is free by request through the company's Website (http://www.nucleusresearch.com/index.htm .) Siebel representatives accused Nucleus of publishing the study to gain publicity. However, Siebel did pull down the customer section of its website the day Nucleus published its report. The company said it is calling the customers listed on the site to reaffirm their stance, a representative said. Doubts about Siebel are weighing on the stock, which closed at $6.49 Thursday, just pennies above its 52-week low. The shares have traded as high as $38.38 in the past year. Criticism that CRM software has not lived up to the hype has been available for some time. So why are Siebel investors growing pessimistic now? For one thing, the love affair between Siebel and Wall Street has taken a while to cool after a heady beginning. Siebel skyrocketed to the top of the CRM market to become one of the fastest-growing software companies in history. After just seven years in business, the company surpassed the impressive $1bn revenue mark, growing 121 per cent in 2000. Additionally, the investment community was wooed for too long by "the sheer force of the personality of Tom Siebel," the company's charismatic chief executive, said Pat Walravens, an analyst at JMP Securities. "It's taken a long time for the customer war stories to catch up with the stock," Walravens said. "I think it's finally happening." Alorie Gilbert writes for News.com